Govt. approves capital infusion of Rs 4,400 crore in ECGC in 5 years
New Delhi, September 30, 2021
The Government on Wednesday approved capital infusion of Rs 4,400 crores in ECGC Ltd., formerly known as Export Credit Guarantee Corporation of India Ltd., over five years from FY 2021-2022 to FY 2025- 2026.
The approved infusion along with efforts made to suitably synchronize with the listing process of ECGC through the initial public offering will increase the underwriting capacity of ECGC to support more exports, an official press release said.
ECGC was established under the Companies Act in 1957 to promote exports by providing credit insurance services to exporters against non-payment risks by the overseas buyers due to commercial and political reasons. It also provides insurance cover to banks against risks in export credit lending to the exporter borrowers.
ECGC endeavours to support the Indian export industry with its experience, expertise and an underlying commitment to the progress of India’s exports, the release said.
It plays a wider role in supporting exports from labour-intensive sectors and encourages bank lending to enterprises of small exporters thereby leading to their revival. Capital infusion in ECGC will enable it to expand its coverage to export-oriented industry particularly labour-intensive sectors, it said.
"The approved amount will be infused in instalments thereby increasing the capacity to underwrite risks up to Rs 88,000 crore. This will enable ECGC to issue covers that can support additional exports of Rs 5.28 lakh crore over the five years in line with the existing pattern.
"In addition, in terms of the report ‘Export to Jobs’ published by the World Bank and International Labour Organisation in February 2019, Rs 5.28 lakh crore exports will lead to the formalization of 2.6 lakh workers. Further, the total number of workers (both formal and informal) will increase by 59 lakhs as per the report," the release added.
The CCEA also gave its approval for listing of ECGC through the IPO on the stock exchange under SEBI's ( Issue of Capital and Disclosure Requirements)Regulations, 2018.
The company intends to increase its maximum liabilities (ML) to Rs 2.03 lakh crore from Rs 1.00 lakh crore by 2025-26, the release said.
"The proposed listing of ECGC Limited would unlock the true value of the company, promote 'people's ownership' by encouraging public participation in the equity holding of the company and also promote corporate governance through transparency and greater accountability.
"Listing may enable ECGC to mobilize fresh capital from the market either through the same IPO or subsequently through a Follow-on Public Offer (FPO) and thereby help in increasing the maximum liability cover for it.
"The disinvestment proceeds will be used for financing of social sector schemes," the release added.